Boeing crown jewel wipes out defence profit despite revenue growth

Boeing’s defence business grew strongly in the first half of 2026, but mounting costs on the next Air Force One aircraft wiped out its quarterly operating profit.

The company recorded a new USD 280m loss on the VC-25B presidential aircraft programme during the second quarter.

Without that loss, Boeing’s defence division would have reported an operating margin of 3.5 percent. Instead, the margin fell below zero.

- Risk remains that we may record additional losses in future periods, Boeing wrote in its quarterly filing guarding itself for further profitability struggles in the programme.

The fixed-price programme is worth USD 4bn and covers the modification of two Boeing 747-8 aircraft into the next generation of Air Force One. Under the contract, Boeing must absorb additional costs when the programme becomes more expensive.

The company attributed the latest loss to higher expected costs for structural and wiring work and for meeting airworthiness certification requirements.

The losses contrast with growing activity across Boeing’s wider defence, space and security business. First-half revenue increased by 17 percent, driven by weapons and classified programmes, higher KC-46 tanker activity, foreign military sales to Israel and Japan and the acquisition of Spirit AeroSystems’ defence business.

International customers also account for a significant part of the division. Orders from customers outside the US represented 27 percent of Boeing’s defence backlog at the end of June.